Brian Armstrong became one of the richest people in the world after Coinbase Global Inc. went public on Wednesday.
Coinbase was co-founded by Armstrong in 2012 and operates the largest Bitcoin exchange in the United States. It was the first major cryptocurrency-focused company to go public. At the end of its first day of trading, the company had a valuation of approximately $ 85 billion, bringing Mr. Armstrong’s 20 percent stake to approximately $ 17 billion. This makes the 38-year-old CEO one of the richest people in the world, based on Forbes’ billionaires list.
Brian Armstrong, co-founder of Coinbase, has a stake in the company currently valued at around $ 20 billion.
Photo:
Michael Short / Bloomberg News
Still, Mr. Armstrong remains largely unknown outside of crypto circles and is an enigma within them. He’s not your typical cheeky Silicon Valley founder or crypto evangelist. He rarely speaks to the press and attends a few conferences. His Twitter account is unusually quiet by the standards of this platform.
What drives him, some people who have worked with him said, is an unwavering focus on getting Bitcoin to the masses.
Mr. Armstrong was an early lover of Bitcoin. Bitcoin was introduced in 2008 by the pseudonymous Satoshi Nakamoto and developed as a digital version of cash.
Users downloaded a program that allowed them to “mine” bitcoins and gave them a “wallet” to store. You could then exchange bitcoins with others on the network. The aim was to create a world in which people would not have to entrust their finances to intermediaries like banks.
This idea resonated with Mr. Armstrong, who first heard about Bitcoin in 2010 while running an e-learning startup. “I couldn’t get it out of my head,” he said in an interview.
One thing he realized in those early days would become a pillar of Coinbase: Bitcoin was unusable for almost everyone. Back then, a user had to download the Bitcoin program and operate a “node” on the network. This is not possible for most people who were not programmers, he said. If Bitcoin went mainstream, someone would have to build an easy-to-use ramp.
This goal became Coinbase’s guiding star. Mr. Armstrong and co-founder Fred Ehrsam defied Bitcoin’s anarchist leanings and worked with Silicon Valley regulators, banks, and venture capitalists to try to make Bitcoin as accessible to the public as email.
Mr. Armstrong’s vision was even bigger. Adam Draper, who runs a Silicon Valley accelerator program called Boost VC, was a young venture capitalist in August 2012 when he met Mr. Armstrong and first heard his vision for Coinbase.
Two things stood out in that conversation, Mr. Draper recalled. Mr. Armstrong foresaw a world with a financial infrastructure based on Bitcoin. Then he put a price on it.
Bitcoin balances on exchanges
Number of Bitcoin transfers to exchanges
Bitcoin balances on exchanges
Number of Bitcoin transfers to exchanges
Bitcoin balances on exchanges
Number of Bitcoin transfers to exchanges
Bitcoin balances on exchanges
Number of Bitcoin transfers to exchanges
“He said it could be a trillion dollar market,” said Draper. “I’ve never had a founder come up to me and say ‘trillion dollars’ and he said it so rationally.”
Mr. Armstrong may actually have underestimated the opportunity. That month, the total value of the cryptocurrency market exceeded $ 2 trillion. Bitcoin alone is worth half that. The price has soared over the past year, rising from around $ 7,000 to over $ 60,000 as more institutional investors stepped onto the plan.
Mr. Armstrong is an open-minded and clear thinker, said Mr. Ehrsam, who served as President of Coinbase for five years and is still on the board. He has the ability to “ask the simple question that matters,” he said.
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Mr. Ehrsam was the more talkative and socially dynamic of the two and took the lead in meetings while Mr. Armstrong listened. It had been a productive partnership, he said, adding that even in the early days of being crammed into a small San Francisco apartment and working 16 hours a day, seven days a week, they never collided.
“We only made sure that Coinbase worked,” said Ehrsam.
One of the biggest tests for Mr. Armstrong’s leadership came in early 2017 when Mr. Ehrsam stepped down from his leadership role. Other early employees also departed, leaving Mr. Armstrong to run the show alone. At that point, Coinbase was growing rapidly: at one point it had the # 1 app on Apple’s App Store.
Brian Armstrong, pictured in 2018, said years earlier that Bitcoin could become a trillion dollar market.
Photo:
Nikki Ritcher for the Wall Street Journal
He drowned, ”said Asiff Hirji, former management consultant at the venture capital firm Andreessen Horowitz. “It was pretty clear that he needed someone to help him.”
Mr. Hirji joined Coinbase in 2017 as President and Chief Operating Officer. He said he helped smooth operations and recruitment to the executive team, including hiring current CFO Alesia Haas and President Emilie Choi.
But Mr. Hirji left less than two years later and is now running his own blockchain startup. Mr. Armstrong’s reflective style and commitment to his own ideas conflicted with two topics that Mr. Hirji said he had a strong interest in: developing products for professional investors and defining Coinbase’s culture.
The company’s fortunes are closely tied to Bitcoin’s infamous momentum swings, and Mr. Armstrong was mostly content with riding those waves, Mr. Hirji said. “It’s hard to get Brian to make a decision about the watch,” he said. “He’s not that person.”
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Speaking of the culture at Coinbase, Hirji said the company nearly quadrupled its workforce in a year, causing additional headaches. “Every time you grow more than twice, the culture breaks,” he said. “It is impossible to maintain the culture when most of the people have been there for less than a year.”
Mr. Armstrong declined to comment on Mr. Hirji’s criticism.
Eventually, Mr. Armstrong refocused on attracting institutional clients, which the company claims now account for about half of the $ 223 billion in assets on the platform. And last year he finally got into the subject of culture.
He called a staff meeting to set out how Coinbase should work. The company is not involved in “broader social issues”, nor would it deal with politics, unless it relates directly to crypto.
“I want Coinbase to focus on fulfilling its mission because I believe that this is the way we can have the greatest impact on the world,” he wrote on the company’s blog. In other words, he said he didn’t want social issues affecting work and offered a severance package to anyone who didn’t like the policy. About 60 employees took him in.
In a vacuum, the memo might have made sense. In fact, there was nothing that did not match Mr. Armstrong’s original vision for the company or even Mr. Hirji’s approach to culture. But in the midst of the Covid-19 pandemic and national protests against racial relations, this sparked an outcry.
In public, the company’s comments have drawn bad press and raised questions about Mr. Armstrong’s leadership ability. But he says he had no problem with the answer. In fact, he claims the memo was one of the most important things he did last year.
He’s not against people who have opinions, he said, but with all the vitriol in the world today, he wants Coinbase to be a “refuge” from it. He wants them to focus on the one problem that Coinbase can solve.
“I don’t think crypto is here to solve every problem in the world,” he said. “But it is here to solve a very important meta-challenge, which is economic freedom.”
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Corrections & reinforcements
Asiff Hirji is a former management consultant at Andreessen Horowitz. A previous version of this article incorrectly said he was a partner. (Corrected April 14th)
Write to Paul Vignes at paul.vigna@wsj.com
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